Freakonomics: Tackling the looming NFL lockout
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TEXT OF INTERVIEW
Kai Ryssdal: It’s time now for a little Freakonomics Radio. It’s that moment every couple of weeks where talk to Stephen Dubner, the co-author of the books and the blog of the same name. It is The Hidden Side of Everything.
Stephen Dubner: Thank you very much, Kai.
Ryssdal: So listen, I know pitchers and catchers have reported it’s basically baseball season, but I want to go back to football for a second. I know, I know, don’t you love that. Your Steelers, man, first of all, they lost the Super Bowl.
Dubner: Hey, hey. Let’s let it lie. Don’t go there.
Ryssdal: But it turns out we may not have football next year. There’s talk of the lockout, players and owners not happy with each other, but the NFL is like the most profitable thing in sports.
Dubner: You know, the NFL may be the most successful league in the history of sports leagues. But the question is: How profitable is it? And the fact is it’s hard to say and that’s because most teams are privately held, they don’t reveal their finances. You probably wouldn’t either, Kai, if you owned an NFL team.
Ryssdal: Yeah, that’s probably true.
Dubner: And the other thing is the NFL itself doesn’t have the authority or the swagger that most people think. The league really serves at the pleasure of the individual team owners, so even though pro football might look like a regular business, that’s just not how it’s set up to work. Listen to DeMaurice Smith, who’s the head of the NFL players’ union.
DeMaurice Smith: It’s a nonprofit monopoly that has been able to enjoy substantial benefits, and every player would admit that it’s a phenomenal business model.
Ryssdal: Well right, so there you go. There’s the head of the Players Association saying that the players agree that it’s a phenomenal business model. What’s the problem?
Dubner: The problem is that the owners don’t agree it’s a phenomenal business model anymore. So here’s what happened. Five years ago, the two sides re-upped their collective bargaining agreement, which they’ve been kind of renewing regularly for 20 years or so. But then, just a couple of years into the new term, the owners announced that they were going to opt out of the deal as soon as they could, which is next week — March 3, 2011. So I’ve been asking around to see: How do you sign a contract willingly with the other side and then just a couple of years later decide it’s a bad deal? How did it go sour so fast? So Kai, let me play you a piece of tape here. See if you can tell me who’s doing the blaming here, OK?
Ryssdal: Another guessing game. All right, go ahead.
Mark Murphy: Obviously, it’s the owners’ fault.
Obviously that’s a Players Association guy, gotta be.
Dubner: It’s gotta be, right? But it’s not, I’m afraid.
Ryssdal: Of course not.
Dubner: That is the president and CEO of the Green Bay Packers. His name is Mark Murphy. Now Murphy, interestingly, is not only a former NFL player, but he also used to work for the players’ union. So he has switched teams. Now, he’s ownership. And the Packers, interestingly, are not like other teams. They are publicly owned by the citizens of Green Bay, which means that they do release a financial report. Last year, they had about $10 million in operating profits, which sounds all right. But that’s down 70 percent from four years earlier. Murphy says that the problem is all that money they have to give to those pesky players.
Murphy: Our player costs have grown at 11 percent since 2006, while our total revenue has grown at an annual rate of about 5.5 percent.
Ryssdal: So to go back to the playground analogy, what they’re going to do is they’re going to lock the players out, they’re going to take their ball and go home because it’s not sustainable.
Dubner: That’s exactly right. That’s what they’re threatening and so what may happen is the NFL players may join the ranks of the unemployed — have to live off their savings, pay for their own health care. Now for superstars like Peyton Manning and Tom Brady, that’s not a big problem.
Dubner: But most players don’t get paid $10 million a year. The median NFL salary is about $800,000, which sounds like a lot. But the median longevity of career is about three-and-a-half years, so you’ve got a window there. Listen to Brandon Jackson, who’s a fourth-year running back on the Packers, whose contract just expired. He’s got a wife, a couple of kids, and a lot of uncertainty.
Brandon Jackson: I have another baby on the way due late March, and you know, who knows what’s going to happen. And I’m only 25 years old. So when you talk about taking benefits and taking money away and not having a season, that’s not sitting good with me.
Ryssdal: All right, so you know, I sympathize, I suppose a little bit, he’s got a baby on the way and life will be more difficult. But there’s going to be very little sympathy for billionaires fighting with millionaires over a multi-bajillion-dollar franchise.
Dubner: Yeah. Most people really couldn’t care less about how the sausage gets made. We just kind of want our football when the time for the season comes.
Ryssdal: It’s the incentives matter thing, right? It’s well take short-term pain for long-term gain.
Dubner: Well the other thing is, don’t forget players care about themselves as players. They’re not necessarily caring about the players who come a generation later. Same for the owners, obviously. But also, if you listen to Murphy and the other owners talk, the fact that costs have risen substantially, driven by players’ salaries, is indisputable. They also say this was an economic need that the owners felt before the economy got bad, so you can imagine that they now make the argument that having gotten worse, the problem is that much worse for them.
Ryssdal: Pro football with Stephen Dubener, FreakonomicsRadio.com. He’s back in a couple of weeks. Dubner, thanks.
Dubner: My pleasure, Kai. Thank you.
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